Elliott Wave Stock Market Update - August 26

 

The market seems to have put in a firm double bottom at 1867 and a break of 1954 resistance tomorrow would confirm it. The count is complete with a truncated 5th in the cash market (or a normal 5th if after-hours is taken into account). Assuming this is a LT W4 count, I'm going to label the recent decline an A of a possible zig zag or a triangle. Obviously, it could develop into a more complex correction or shoot straight up to new highs as the correction target area (1820-1900) I mentioned last week has been met.

I am posting couple of charts to give an overall perspective of the recent decline. As you can see, there isn't really nothing out of the ordinary at this point and the assumption should be this is a correction within a bull market. With that in mind, the long term trend signal will likely turn bearish in the next couple of days and the current bounce is more likely than not a B wave. Depending on how high the counter-rally goes, we could see an equally powerful C wave that will end up challenging the 1820 level or even go below it.

Lastly, I added to my China shares today given the steep decline there in the past few days. I'll probably position trade this particular lot depending on how strong the coming counter-rally is.

For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit http://www.ewaveanalytics.com


Short Term Trend = Bearish
Medium Term Trend = Bearish

Long Term Trend = Bullish trend being challenged - change imminent

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.